March 24, 2006
Mail Stop 7010
Kelly Tacke
Vice President - Finance, Chief Financial Officer and Secretary
Palm Harbor Homes, Inc.
15303 Dallas Parkway, Suite 800
Addison, Texas 75001
Re: Palm Harbor Homes, Inc.
Form 10-K for Fiscal Year Ended March 25, 2005
Forms 10-Q for the Fiscal Quarters Ended June 24, 2005, September
23,
2005 and December 30, 2005
File No. 0-24268
Dear Ms. Tacke:
We have reviewed the financial statements and related
disclosures in the above referenced filings. We have the following
comments which should be addressed in your future filings with the
Commission. If you disagree, we will consider your explanation as
to
why our comment is inapplicable or a revision is unnecessary.
Please
be as detailed as necessary in your explanation. Please
understand
that the purpose of our review process is to assist you in your
compliance with the applicable disclosure requirements and to
enhance
the overall disclosure in your filing. We look forward to working
with you in these respects. We welcome any questions you may have
about our comments or any other aspect of our review. Feel free
to
call us at the telephone numbers listed at the end of this letter.
Form 10-K for the year ended March 25, 2005
Consumer Financing, p. 4
1. We note the significant growth in consumer loans receivable
on
your Balance Sheet. This amount comprises 25% of total assets at
December 30, 2005. We also note that your compliance with the
warehouse borrowing facility debt covenants is based in part on
loan
delinquency ratios. Given the materiality of your lending
operations,
detailed disclosures about your loan portfolio are required in
future
filings pursuant to the guidance in SAB 11:K. These disclosures,
outlined in Section III.B and C of Industry Guide 3, include the
following:
Kelly Tacke, CFO
March 24, 2006
Page 2 of 3
* As of the end of the last fiscal year, present the amount of
loans
which are a) due in one year or less, b) due after one year
through
five years and c) due after five years;
* Present the total amount of all loans due after one year which
a)
have predetermined interest rates and b) have floating or
adjustable
interest rates.
* State separately the aggregate amount of loans that are a)
accounted for on an nonaccrual basis, b) accruing loans which are
contractually past due 90 days or more as to principal or interest
payments and c) loans not included above which are troubled debt
restructurings as defined by SFAS 15.
* Describe the nature and extent of any loans where known
information
about possible credit problems of borrowers causes management to
have
serious doubts as to the ability of such borrowers to comply with
the
present loan repayment terms.
* Describe any concentration of loans exceeding 10% of total loans
which are not described above. For example, loan concentrations
are
considered to exist when there are amounts loaned to a multiple
number of borrowers located in specific geographic areas which
cause
them to be similarly impacted by economic or other conditions in
that
area.
Liquidity, p. 16
2. We note that you were not in compliance with one of your
covenants and obtained a waiver of default from the institution.
We
further note the representation in your April 28, 2004 response
letter regarding the related disclosure issue. As previously
requested, please disclose in future filings the covenant levels
required under significant debt covenants and identify the
specific
covenant for which noncompliance was waived. Given the
significance
of these debt agreements to the company`s liquidity, and given the
potential adverse impact if the debt repayment was accelerated,
this
disclosure is necessary for an investor to assess the company`s
ability to remain compliant. See Item 303(a)(1) of Regulation S-K.
Contractual Obligations and Commitments, page 18
3. In future filings, please include the interest commitments on
your interest-bearing debt in your contractual obligation table,
or
provide textual discussion of this obligation below the table. If
you provide a textual discussion, the discussion should quantify
the
interest payments using the same time frames stipulated in the
table.
Refer to footnote 46 to Release 33-8350 "Interpretation:
Commission
Guidance Regarding Management`s Discussion and Analysis of
Financial
Condition and Results of Operations."
Kelly Tacke, CFO
March 24, 2006
Page 2 of 3
Form 10-Q for the quarter ended December 30. 2005
6. Debt Obligations, page 5
4. In future filings, please clarify the securitized financing
critical accounting policy disclosure to state the GAAP basis for
treating these transactions as financings instead of as sales.
Item 4. Controls and Procedures, page 22
5. You disclose that your disclosure controls and procedures
"are
adequately designed" at December 30, 2005. It does not appear
that
your certifying officers have reached a conclusion that your
disclosure controls and procedures are effective. Please revise
the
disclosure in future filings to clearly state the conclusion about
the effectiveness of disclosure controls and procedures. See Item
307
of Regulation S-K.
Please provide these disclosures in future filings or
advise
us within 10 business days if you disagree with any of our
comments.
Please submit all correspondence on EDGAR as required by Rule 101
of
Regulation S-T. Please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.
You may contact Melissa Rocha at (202) 551-3854, Al Pavot at
(202) 551-3738 or me at (202) 551-3255 if you have questions
regarding comments on the financial statements and related
matters.
Sincerely,
Nili N. Shah
Branch Chief
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
DIVISION OF
CORPORATION FINANCE